♪ is wednesday, the 22nd of june. i am rishaad salamat. this is "trending business". ♪ rishaad: we will be visiting various spots in the world, including singapore. we have the retreat. defensive,n on the will the economy pick up, not man. stocks heading for their first or klein led lower by japan.

investors read main concern about -- remain concerned about the referendum in britain. do let us know what you think of our top stories. that is my handle, @rishaadtv. please use #trendingbusiness. negativity in the index futures, indicating a mixed picture. trying to make sense of this market. there are conflicting catalysts. sidelinedincreasingly as voters go to the polls.

saying when we are it comes to sydney, hanging onto gains. japanese stocks falling for the first time in four days, the nikkei 225 down. kiwi stocks down. entering the fray, straight times index singapore stocks up. seeing some good gains. the regional benchmark falling. quite a bit of weakness. yellen and janet that first day of testimony, striking a cautious tone. not as impactful given that it comes on the back of the decision to hold again. we take a listen to what she had to say. cautiously will

allow us to keep the monetary policy and support to economic growth in place. this is while we assess whether growth is returning to a moderate pace, whether the labor market will strengthen further, and whether inflation will continue to make progress towards the 2% objective. at what we a look are seeing in terms of safe haven demand play we have then seeing. take a look at the yen, strengthening again in the early session. at 104.55, which gave her spite when it comes to those exports. it will be interesting to watch what happens to the yen. slump, down by 2.5%, falling the most in four weeks, hitting the lowest in two weeks. despite that, take a look at to date play, goal

driven by fading expectations of the fed tightening, still up by 20% year to date when it comes to gold. holding steady, although we are seeing something of a correction over the past few days as we head into that vote. all eyes will be on safe haven assets, gold, yen, all as the .rading day progresses rishaad : theaad: the result of decision remains in the balance with each side showing it ahead. >> opinion is divided on this contentious issue. it has been dominating market sentiment. debate had the fiery

list arguments coming from the leave campaign, on message that the u.k. needs to "take back control." boris johnson saying immigration must be controlled. and takevote leave back control, i believe that this thursday could be our country's independence day. federal reserve chair janet yellen also weighed in on the bait, telling lawmakers that brags it could create negative market box -- all at tutti. block isghi said the trying to cope with all possible contingencies of the referendum. an london mayor gave impassioned plea to voters, saying that if britain", then "we are out for good and there is no going back to her code -- going back." hisd cameron emerge from

office to make a statement, urging the older generation to think about the hopes and dreams of their children and grandchildren. >> it is about our economy. it will be stronger if we stay. it will be weaker if we leave. that is a huge risk to britain, two british families, temperature will jobs, and it is reversible. is worth noting that even as paul's split, oddsmakers are suggesting the remain size is in a strong position. this is a bloomberg calculated possibility of a leave outco0me . we are seeing that it is showing signs of that leave really falling off, suggesting that the remain campaign is getting stronger. that has been reflected in the pound, holding against the

dollar since january. the probability of a vote to .eave is 26%, down from 43% we are expecting that there will be a state vote coming through. much.d: thanks very we will have a detailed look at how a brags it would make it harder for britain to access markets. tweet us your thoughts at @rishaadtv, including #trendingbusiness. softbank at its annual ,hareholder meeting in japan hours after news of the company's heir apparent calling it quits. he says he has lots of further crazy ideas to follow. those ideas will take 5-10 years to flesh out. we are looking at some live pictures of the shareholders meeting in tokyo at the moment.

overnight that he spent a good amount of his time replying to tweets. one tweet basically said he promised to make a cameo appearance at this meeting. when it comes to business, the part of thehis business, softbank making substantial investment, will that take a step back? we will see and keep you updated. let's get to the nuts and bolts of this announcement. it was announced by the company before markets open. shares doing this. his last day as president will

be at the end of this month. on anwhich, he takes advisory role for about a year. he will also remain on the board of softbank. the broad reason he is giving thehis departure is that vacancy he was being groomed for one not be available for five more years. right to nextking to each other. i will be forever young, and that's what i want to keep thinking. i want to keep going until i lose my confidence in my physical strength and i want to keep holding on of course to this position. i really feel terrible for anyone,nconvenienced but it would not be good to hold my feelings back. that being said, he has confirmed that he sold his .hares at a small loss

in the meantime, the plan is no plan, according to one of his tweets. rishaad: let's have a look at some other stories making headlines. we have one chinese internet mobile with global gaming and visions. rosalind: tencent is buying super cell, the biggest ever deal. it would at some popular mobile titles to its collection. tencent reckons the deal will give it wider access to the wider global mobile gaming market and free up opportunities to collaborate with other developers. has created a consortium to take control of super cell, but it says it will complete the acquisition on its own, if

necessary. bring togethero two of his companies and a $2.86 billion deal called an "no-brainer." elon musk is the largest shareholder of both companies, with 22% of solar city, and 21% of tesla. that works out to a premium of as much as 35% from tuesday's closing price. solar city rose 22% in after-hours trade, while tesla fell. seven out of 13 economist poll nextoomberg predicted the indian central bank governor. the current chief economic advisor. he is considered to be on the dovish side of the policy spectrum according to a note. the note also says less of a believer in fiscal orthodoxy.

he has argued for monetary easing to boost growth. the current governor will step down in september. coming up later in the program, almost 20 years since the handover to china. hong kong's richest man gives us his vision. next, the count down to breakfast reaching its final stages. we will look at how commodities are faring in that deal. ♪

>> that is 9:44 a.m. in hong kong. these of the stories making headlines around the world. mosten has surprised analyst by surging 13% this year, the best performer among developed market currencies, posing a challenge for the japanese economy as a strong yen reduces the value of exports and threatens a recovery.

governor kuroda remains upbeat, including 2% inflation. gowe still have a way to hitting the 2% target, but we have seen positive effects. towas most important for us demonstrate our commitment to achieve the prize stability target. we don't intend to change our commitments going for it. south korea says the north fired two missiles this morning. the midrange missiles were launched near the east coast. it is the latest of fines of international sanctions. the south korean defense ministry says the first launch was a failure, but the second missile flew 400 kilometers. at least two other recent firings also failed. the u.s. says iraq has retaken only a third of falluja four days after the prime minister declared it had been liberated from so-called islamic state forces. washington says iraq controls

part of the city, but most of falluja remains competitive. the city has been under militant control for two years. about 50,000 civilians remain trapped inside. powered by over 2400 journalists and 150 bureaus around the world, this is bloomberg news. rishaad: let's have a look at what's going on in the commodities space. signs that britain may vote to remain in the european union. let's get more on that and how other commodities are faring. great to see you. we are getting towards that finish line, in this build up right now, so overall in the commodities complex, how are things faring in your view and why? . >> there's a great deal of preciousss in the

metals and energy complex over the last few days. things that the channels of influence extend across asset classes, safe haven demand's for gold, rising dollar, which will depress the industrial metal complex and metals within that sector are most burnable to the dollar, copper, and then the general wave of risk aversion which will impact oil, one of the most speculative commodities, right across everything. some weaknesso be in emerging-market currencies, specifically the producer commodity currencies, which act to lower the cost of production of many of these commodities, and in terms of agricultural, stimulate exports as well, so a wide range of potential impacts. rishaad: absolutely. the thing is, we have got different scenarios for if the u.k. decides to stay and if they

decide to leave. i'm guessing the balance when you are looking at risk is of course if they decide to leave. what would be the immediate consequences? do think there will be a lot of knee-jerk reaction to this which might lead to things going down too far too fast? i think the most immediate reaction will be in gold. we expect gold to jump 10% in the event of a brexit. we expect volatility and goal to increase significantly, and this can be played out in terms of from an investor perspective through accessing instruments like a variance swaps, increase and buy your volatility increases, and capturing the move and gold can be played out in any one of the long instruments around the world as well. that, you will have a knee-jerk reaction i think immediately. we expect metals to move down by 5%, principally copper. 5%,xpect oil to move down and the best way of playing oil

in the context of the recently bullish or supportive fundamental outlook in the medium-term is perhaps in a short position in the front spreads, so that would be going short near term contracts and longer the more medium to long-term deliveries. we expect that weakness in the forward curve to be short-lived. rishaad: the thing is, as soon as this vote is over, it is not as though even if britain does state, volatility will be dare -- there, because then will we be focusing on the u.s. economy after what janet yellen said yesterday, which was certainly, you could call it dovish, but you could call a quite wearing when you look at what's going on in u.s. economy. >> you could. is why gold is particularly interesting commodity at this juncture, because in the event of a remain, there will be an immediate repositioning of of a lot of links in the gold market coming ahead of -- hedging

against the brexit outcome, so if we end up with a remain scenario, people will refocus on u.s. monetary policy, specifically what yellen was saying yesterday, in our opinion a somewhat more cautious outlook on the economy, and gold will likely benefit from that as well. point in theg precious metals sector with both outcomes in the referendum impacting prices. some of these agricultural commodities as well, there is a big factor. >> yes, indeed. we just had the strongest el niño on record, equal to the one in 19 oh seven. generally speaking, when you have had a record el niño event, it is followed by i love mean -- it means there are droughts in the u.s. that impact crops like corn and soybean,

which could build upward pressure on those, and it also means you get a cold northern hemisphere winter, principally in the u.s. in north asia, so that could cause oil prices to be firmer in q4, q1 of this year, and of course the agricultural complex, specifically corn and soybeans to see some upward strength in q3, q4 this year. rishaad: great talking to you. have a good one. let's tell you about what we have coming up next. the factors gloom, putting the brakes on growth and asia's top financial hubs. that is coming ahead on trending business. ♪

rishaad: "trending business" you are back with "trending business". hong kong and singapore have shown brightly as asia's economic stars, now the heady

days of financial growth could be coming to an end. what kind of headwinds are we facing in hong kong and singapore? >> the two common threads, one .s china the other side is the banking itself hurting hong kong singapore, trading going down on both stock exchanges, ipo you're going down and of course banks are coming back in cost and hiring slowdown hiring and actually quit jobs well. together,ke it all mix in the slowdown in global trade is well, and it just means both cities are in something of a slowdown. hong kong is facing its biggest challenge in two decades. howaad: when we look at

this plays out, it must be a good scenario, but a worst-case scenario? there is a crisis scenario if the fed were to start hiking interest rates again, and if that was to start taking capital letter the two cities. in that scenario, hong kong dollar would be rising, borrowing costs would be rising at a time and money is being taken out. could create a crisis because borrowers who borrowed an hong kong dollar would start coming under pressure, and thus a worst-case outlook, even before we get to the other scenario if we were in a situation where the fed would hike again, that would put pressure at a time ago needed. with hongspecially kong being pegged to the dollar, essentially having to outsource its monetary policy. the view singapore is

slightly more diversified, not its hinged to the china growth story has hong kong. of course, it's not all doom and gloom, hong kong does remain the capital for china. china has yet to hit a hard landing, so there is a scenario aboutthese twos it is is adjusting to a new reality rather than the boom days of the tiger economy. rishaad: great talking to you. let's look at the markets and see what is going on ahead of the official open in hong kong and indeed of course and shanghai's well, south korea looking like this, moving to the upside. nikkei 225 not really benefiting from that. a triple digit loss. australia, new zealand look like that at the moment. threat ofing up, the

brexit reaching far and wide, discussing how britain leaving the eu single market could affect asia. well,e the open as looking like the hang seng will be down when things get underway in a couple of minutes. ♪

♪ rishaad: our top stories, asia-pacific stocks heading for the first drop in four days as traders moved to the sidelines. the possibility of the u.k. overng the eu hangs markets, even though both markers see only a 20% chance, weaker gold, oil rallying. softbank moving to the upside after news that the president is stepping down, with the founder making it clear that he would not be getting the top job

anytime soon. control of maintain the company that he built to one of the largest in japan. softbank agreeing to sell its stake in super cell. janet yellen offering a subtle but important change and economic language during her testimony on capitol hill. whether,w assessing rather than win, the u.s. economy will show signs of picking up. right, the open in shanghai, hong kong. we're taking a look at the open in shanghai and hong kong, both to the downside. were seeing a distinct lack of catalysts when it comes to these markets given that we have had

low firemen low volatility. shanghai stocks retreating to levels seen in january 2015. taking a look elsewhere, the biggest laggard is japan, stocks falling for the first time in four days. we are seeing lags in new zealand as well, the kiwi down by .5%. some strong gains from korea, up by .5%. tensght times up by seven of 1% despite a drag from some of the notable commodities related stocks. up by 2/10 of 1%. the msci pacific seeing gains for three days, but snapping that, things looking mixed. on the one hand, we did have caution, the name of the game when it comes to the

fed and rate hike trajectory. on the other hand, so much uncertainty leading up to brexit , essentially too close to call. tokyo gas is the biggest laggard in the region. suzuki motor is up, an upgrade from goldman sachs. ito, a little rest bite when comes to that stabilizing yen. noble group continuing to plunge in the singapore section -- session. downside pressure from the aussie gold miners given that gold has full and the most in four weeks, giving back to .5% in that two days slumped as the remain camp gains more traction in the polls, who we are seeing losses coming through. rishaad: thanks. britain could find itself having to renegotiate trade deals with asian nations and could do so

from a position of weakness if it voted to leave the eu. how important is asian trade for the u.k.? you consider what will happen in the future will, two thirds of global growth comes from asia, so is becoming much more important. if you look at the translations -- relations with china, it's doubled u.k. exports, now something like $80 billion worth , but that said, the u.k. has a long way to go. if you look at the top sustained trading partners the u.k. has come only one asian country is in that group, and that's china. rishaad: is that reciprocal trade? >> most asian countries, the uk's not even in the top 10, except for new zealand. rishaad: any advantages of a departure? >> one of the arguments is that if the u.k. comes out, it will

be able to maybe negotiate faster trade deals because at the moment the european union has to account for 28 different countries, so it might be able to do it faster. moread: and perhaps import from the asian countries because the pound might depreciate. let's focus on what the trade situation might be. there are disadvantages. rishaad: how would it hurt? >> from the people i've been speaking to, one of the , when you consider the size of the u.k. population, countries are interested in accessing big markets. and 30mes out, 400 million compared with the u.k., markets are important. other countries will be looking thate u.k. and saying, ok,

gives them the advantage. the other thing is that the u.k. will have to its exits from the single market. countries are not going to want to negotiate with the u.k. until they know what the new arrangements are that the u.k. will have with the single market. the not going to be a little wrap up these deals in the next two years, so these are some of the does advantages. rishaad: thank you very much indeed. let's get more on the sudden departure of the head of softbank, widely expected to as head of the giant, but not anymore. >> not anymore. a simple way of selling the story is that he wants to stay on for longer. he says some of the ideas he has requires him to stay in the role of little bit longer, at least 5-10 years more.

release, ofpress course, bitterly and figuratively, from the company, it comes down to a difference in the expect nation and a timetable of when perhaps he was thinking he would take over and when the current president is willing to step down. now, you can avoid talking about some of the opposition from on thingsareholders like his qualifications for the role, whether he harbors a conflict of interest, because he was an advisor to silver lake. that being said, it's his last day at the end of the month. he will take on an advisory role for about a year. the shareholders meeting is also taking place in tokyo right now. i was just listening into that nothing newsy so far.

the talking about long-term strategy at the conference. been veryow, he has active on twitter, answering questions. >> he really has. everything from his thoughts on the oil price, whether he might dabble in long-distance running, but some of the things here, will he start his own vc fund. this is what he says on twitter in reaction to the question. nothing of that just yet. can we look at the next one here? techhts on softbank's investment, does this mean him stepping away means that softbank tanks is vital for pedal when it comes to tech investment in what is a do for their current investment. he says he will support them all the way. thoughts on the president

changing his mind midway. he says reflection and a change of mind comes as it is his prerogative. softbank is linked to his identity. rishaad: thank you so much for that. ok, let's check in on some other stories we are following for you. mcdonald's has received several bids for outlets in china, looking for long-term strategic workers in china and said the deal could be worth up to $3 billion. reuters said offers have come from different groups. beleaguered indian tycoon stepping down from another prominent business role, quit as chairman after 12 years in that position. in march, he announced he was resigning as chairman and gave

up the chair of united spirits in february after the new owner of salt him of all liabilities linked to financial lapses of the company. anniversary of hong kong's return to china, the relationship has never been more strain. protesters, detentions, wealth cap, questioning how the territory is governed. in an exclusive interview, we ask about the future of the relationship. >> >> there is a lot of wealth

disparity in hong kong and china, how do you resolve this as a say society -- as a society?

>> in hong kong, there are a lot of unhappy people.

rishaad: sharing his thoughts on the future of hong kong. coming up, mckinsey warning of a triple threat to banks in the asia-pacific. we will hear from one of the authors of that report next on bloomberg. ♪

>> it is 9:45 a.m. in hong kong. these are the stories making headlines around the world. rio tinto's latest shakeup may be a sign of a spinoff.

the incoming ceo is revamping for key divisions. like rio is putting a about $9 billion of unwanted assets into a single task it, ready to spin off. bhp billiton made a similar move last year. iran has confirmed the deal to to buy jets from boeing, 100 planes, but the price hasn't been released and still needs approval from the two governments. it is boeing's first deal since the lifting of sanctions in january. interest rate its for a fourth month. the central bank lowered the .vernight lending rate to 9% the decision leaves the difference between the highest and lowest benchmark rates at the narrowest since 2010.

this is bloomberg. bank profits in the asia-pacific have been hit by a triple whammy. mckinsey says the region's face a powerful storm. a senior partner at mckinsey joins us now to tell us more. about this. what is going on? what is this triple whammy? sector had ag golden decade of wonderful profit growth that accounted for nearly 50% of global profits over the last decade. as we look forward, there are three big factors that might in end the party.-- an were seeing the global macro slowdown in asia, a reduction in boy from banks in terms of growth, so that is one.

second, the obvious, which is financial attack from technology players, but more importantly, also from the non-brinks -- nonbanks, which will exhort -- exert pressure on margins. third, the weakening balance sheets, and particular he we have seen over the last 3-4 ofrs nearly $400 billion nonperforming loans cropping up in the balance sheets of banks across asia, so to put that in perspective, between 2007 and 2011, nonperforming loans grew by close to 7%, and corporate balance sheets are also stressed. growthbination of slower , tougher margins, and rising nonperforming loans is what called the triple whammy. rishaad: are you including

chinese banks in all this? >> indeed we are. indeed we are. we are creating all banks across asia pacific. do chinese banks q this when you look at some of them metrics that the banks use, such as nonperforming loans? notndeed, they do, but inordinately. just to give you a breakdown of the loans. chinese would account to 40% of thenonperforming loans, but indian banks, the japanese banks, and the indonesian banks, are also party to this. indian banks contribute 20% to these nonperforming loans, as do the japanese. if we look at some of these chinese metrics, the return on equities are very health the, at least it looks like it on the surface of it, but you delve deeper and there are some doubts there. return on equities will be a key

measure, is it not? it gives us an idea of the pulse of these lenders, right? absolutely. when i talked about the golden decade of growth, it was not just growth, but also profitability. banks,looked at chinese they had a return on equity of 20%, as did the indonesian banks , and that's where we would see a significant amount of pressure moving forward. we would anticipate that our oe could drop from anywhere of six percentage points. to what nearly 14% as which are thinking about there as well, and that's your projection. think should you be taken by these lenders? what should banks be doing right now to protect themselves? aree would say that there four things to keep in mind. the story inhile

terms of the overall market opportunity is challenging, there are still pockets of growth which are quite exciting. we identify and a report three pockets of growth. under bankedrge retail consumers who are now coming into the banking mainstream. bethink that number could about one billion consumers, so that is number one. number two, we look at the underserved small and medium enterprises across markets in asia, and we do believe that there is now real opportunity to serve them profitably given the access to data and the new business models that many of the banks are beginning to deploy. that is significant. the but not least, i think middle class are the affluent. that thethat in asia number of a fluent customers will be the largest in the world, topping north america over the next five years, and these three opportunities are huge and significant.

in order to capture these and to sort of weather the storm, we believe there are three r's. the first is resilience. emphasis on a real strengthening the balance sheet would be critical. reinvention, and the reinvention has to come through both a data and digital transformation, both to reduce their costs by about 20%, as well as capture some of these newer opportunities using new digital models. sorry -- sorry, we are just out of time. an absolute pleasure talking to these come on the program again at some point. the golden age is perhaps coming to an end. coming up, powered by the sun, tesla plans to buy a america's top solar panel installer.

details are on the way. ♪

rishaad: tesla making a bid to -- to buy the biggest maker of solar panels. tesla, a battery and ,armaker, acquiring solar city ,ooking at a 21% to 31% premium but there's a lot of detail given that there are a lot across interests. elon musk is the largest shareholder in both companies and the chairman of solar city, meaning he will re-create his -- recused himself from one company. a share price below the 200 day moving average. rishaad: the question is, what does it bring to the party here and why are they doing this?

one narrative says operational synergies, batteries all the way up to the cars that have those batteries, the solar panels that need those batteries, and the consumers who want to buy them. there is another question we need to work out, which is there a fundamental benefit in doing that, and also you complicate the capital structure of this company. you have a relatively simple structure that is much more complicated, which is what solar city has. a lot of long-term asset ownership and a lot of fixed income. we will see. it comes down to what the disinterested shareholders of the say, but the disinterested shareholders, a way down from all the shareholders holding these companies. and for some of the founding venture investors who hold about 5%. rishaad: i'm betting that it works. >> fair enough. rishaad: coming up in the next

hour, hong kong overtaking the west end of the most expensive place to rent office space. prices.king property ♪ .

♪ announcer: from our studios in new york this is "charlie rose." charlie: joe biden is the 47th vice president of the united states. he has dedicated his life to public service. he was a united states senator from delaware for 36 years. he has a deep knowledge of foreign policy and served as the chairman of the senate foreign relations committee twice. last fall he decided not to run for president in 2016. that decision followed intense deliberations with his advisors and his family. he has withstood tragedy in his life. he lost his wife and daughter in